Best option for a Teachers retirement plan in Louisiana.

(Posted on 5/1/13 at 10:10 pm)

So my wife and I have been married for 4 years, she is 25 I am 27 and after making most of our first major purchases over the past year, house, vehicle, our first child (lol), we are at a point financially were we want to start aggressively exploring our options for saving towards retirement.

I am in Sales/Restaurant business and while I make close to double what my wife makes on a yearly basis, I do not have the retirement options through my work like she does being a state employed teacher. I was just wondering if anyone here was familiar with the options that they provide in Louisiana and what our best option would be moving forward.

Since her work matches what she puts in, I'm assuming it would benefit us more to look into her retirement options instead of me setting up a fund through an investment firm?

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/1/13 at 10:25 pm to dgtiger3)

I'll get bashed but we use Edward Jones ... we've got Roth iras and SEP .. we're both self employed. We max ROTHs and put what our acct tells us into the SEP (we always tell him to figure out the max that we can put in -- there are limits) and then we put into our mutual funds if we're able.

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/1/13 at 10:35 pm to tiger91)

I have a friend who works for Edward Jones who I have already scheduled a meeting with next Friday. I have just learned to never only trust one sides opinion, and I know there is a lot of good information that has been shared on this board. I feel like we are still young and I really want to put us in good financial footing as soon as possible.

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/2/13 at 8:34 am to dgtiger3)

My wife is also a state employed teacher. Your wife has 8% of her income that goes into the pension-type of retirement plan the state has set up for her. The state also places 8% into that pension fund. However, there's a formula that determines your wife's retirement benefits at retirement. She likely won't get everything that she has paid into the "fund". Although it's going to be guaranteed for life, she could very well receive less than what she paid into it. We both have a separate IRA with Vanguard (Vanguard 2050 fund) that we max out each month. We don't make much money, but we make damn sure those IRA's are maxed out each month. I won't have my job forever and she won't be teaching in public schools forever so we want to have something on the side in addition to whatever we have with our jobs. I suggest you take a look at Vanguard. Their fees are the lowest in the entire industry (look it up, it's true). Also, you don't have to be a financial expert to figure out what's best for you. Keep it simple and go with a tax-friendly mutual fund. The Vanguard retirement funds are the best options for my wife and I and I have to think that they are the best options for you also. Check them out, you can't go wrong with them. Set it on automatic deposit each month and forget it. As long as you max it out each month, you will have a very decent retirement on that alone - not including whatever your wife will have with the state or whatever job she and you will have. Good luck!

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/2/13 at 8:57 am to TDsngumbo)

quote: Your wife has 8% of her income that goes into the pension-type of retirement plan the state has set up for her. The state also places 8% into that pension fund. However, there's a formula that determines your wife's retirement benefits at retirement. She likely won't get everything that she has paid into the "fund". Although it's going to be guaranteed for life, she could very well receive less than what she paid into it.

I don't know how she would get less than what she put in, unless she quits before reaching the necessary years. In that case she the money she put in, after taxes (which were never paid on the income)

I believe the formula is-

>20 years= 2% * #years, of the average of your highest average salary for a period of 3 years.

> 25 years= 2.5% * #years, of the average of your highest average salary for a period of 3 years.

> 30 years= same as 25 years but eligible for Drop at any age.

> 40 years = 100% of your highest average salary over a period of 3 years

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/2/13 at 9:19 am to TigerintheNO)

Shit, sorry I should have clarified my reasons for believing that. I'm just not convinced that the state will keep that benefit for teachers. I believe eventually, that will be taken away from the school system.

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/2/13 at 10:15 am to TDsngumbo)

quote: sorry I should have clarified my reasons for believing that. I'm just not convinced that the state will keep that benefit for teachers. I believe eventually, that will be taken away from the school system.

I agree somethings will change, but it will be hard to take away benefits from those that are vested & the constitutional amendment passed last year requiring a super majority to make any changes to existing plans.

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/2/13 at 4:15 pm to Zach)

All good suggestions, and yes I want to set something up myself I just wasn't exactly sure of what my best options were. I have already setup a meeting with a Financial advisor for next week. I definitely have a better understanding of what her retirement benefits are and we need to discuss if she is going to work the full 20 to get her minimum retirement benefits back.

re: Best option for a Teachers retirement plan in Louisiana. (Posted on 5/3/13 at 1:01 pm to dwr353)

quote:Retirement benefit she gets is safe. Can only change for new hires.

Don't be so sure.

quote:. I have been drawing my LSP pension for 18 years and it has added up to a lot more than I paid in.

there in lies the problem.

To the OP, you have an opportunity to do a 403b or 457 plan which lowers your taxable income and I would suggest doing that in addition to the pension. Remember that if you leave the school system for any reason you will only get what you put in, assuming you are vested like I was.